‘Tesco law’ warning to small firms
SMALL, ‘high street’ law firms in the North West have been warned to take urgent action to safeguard their survival in advance of the arrival of so-called ‘Tesco law’ .
North West law firm Mace & Jones’ partnership department says smaller practices face a “critical moment” after the Legal Services Board confirmed that the
Alternative Business Structure regime will most likely come into force in mid 2011.
This will allow non legal bodies such as supermarkets and motoring organisations to sell legal services.
Mace & Jones partnership unit partner Ian Hodgkinson said the reforms, also dubbed ‘Tesco law’, will have far reaching, and potentially devastating, consequences.
“Firms offering personal injury advice, residential conveyancing, family law and probate work really need to look at the future,” he said.
“In two years’ time the ‘big bang’ will be happening. Those firms which fail to properly plan, adapt and protect themselves face real problems.”
Mr Hodgkinson said he is especially concerned because most high street law firms operate as partnerships.
“In essence if you operate as a partnership, and the business goes bust, the partners have unlimited personal liability for the debts of the business. However, firms can protect themselves by restructuring as a limited liability partnership. This way the business and not the partners are liable for debts.”
Mr Hodgkinson said while it is still unclear how the high street will respond to the ‘big bang’ some high street estate agents, law firms and accountancy practices could be tempted to merge with each other to survive.
